At the invitation of the Chairman, the Deputy Secretary for Housing/2 (DS for H/2) highlighted the salient points in the information paper on Home Starter Loan Scheme (HSLS). Members then proceeded to the discussion session.

Eligibility criteria

2.A member considered that the proposed inclusion of families who had not owned any residential property in the previous five years was at variance with the objective of HSLS which was targeted at genuine first time home buyers. He said that applicants who owned properties five years ago could apply for Sandwich Class Housing Loan Scheme (SCHLS) and therefore priority should be remained for first time home buyers under HSLS. Members in general agreed that HSLS should be catered for first time home buyers only. DS for H/2 responded that the setting of the benchmark of HSLS at five years would provide access to applicants such as returned emigrants or former businessmen whose personal circumstances had changed over the restriction period and could reasonably be regarded as first time home buyers. Moreover, a longer restriction period would be difficult to enforce given the substantial work incurred in checking property information from the Lands Registry. DS for H/2 nevertheless undertook to consider reviewing the definition of " first time home buyers' and including HSLS applicants who had rescinded from holding properties in joint names.

3.As regards overseas property owners, the Chief Assistant Secretary for Housing (CAS for H) confirmed that subject to the net assets limit of $1.2 million, families who did not have any property in Hong Kong but owned property in overseas country would be eligible for HSLS. This was to take account of their housing needs in Hong Kong. Furthermore, it would be difficult to ascertain if beneficiaries owned any overseas property. Members were not convinced of the Administration's response and suggested that HSLS applicants could be required to declare ownership of overseas properties. While acknowledging members' concern, DS for H/2 emphasized the Administration's intention of imposing as little restriction as possible on HSLS beneficiaries.

4.As to whether the Administration would consider according priority to low income families especially those White Form applicants whose monthly incomes not exceeding $30,000, DS for H/2 took note of members' concern but advised that such priority might not provide practical benefit to those earning less than, say, $10,000 a month, who were unlikely able to afford to buy their own homes despite the provision of downpayment loans.

Financial arrangements

5.Having regard to the high property prices, members were of the view that the maximum loan amount of $600,000 might not be adequate, in particular if HSLS applicants wished to buy a larger flat. They urged the Administration to consider increasing the maximum amount of loan under HSLS and extending the repayment period of the loan to tie in with that of the mortgage provided by banking institutions. DS for H/2 explained that the prime concern of general home buyers was the requirement for substantial downpayments. Given the fact that over 70% of the residential properties bought under the existing Home Purchase Loan Scheme or SCHLS were under $3 million, the maximum loan amount of $600,000 and the provision for repayment to be started in the fourth year of the drawdown of the loan would represent significant assistance to applicants concerned. Nevertheless, applicants should carefully consider their financial situation before deciding on the type of flats to be purchased. CAS for H supplemented that banking institutions would take into consideration factors, such as applicants' affordability and the requirement for repaying government loan in approving mortgage facilities. Generally speaking, the monthly instalments would not exceed 40% of the applicants' total household incomes. At members' request, DS for H/2 undertook to provide information on the housing expenditure as compared to the household income of HSLS applicants.

Admin

6.As regards the measures in place to recover the loan in the event that beneficiaries failed to repay their mortgages due to financial hardship, DS for H/2 advised that administrative arrangements similar to that of SCHLS would be adopted. To facilitate a better understanding, a note on such arrangements would be provided in due course.

Admin

Impact on property market

7.A member expressed concern that property prices might surge due to the injection of $3.6 billion a year from HSLS into the market. DS for H/2 envisaged that the impact of the Scheme on the primary property market would be minimal as many beneficiaries would purchase flats in the secondary market. The member did not agree with the Administration and cautioned that the property market as a whole would rise consequent upon the surge of property prices in the secondary market.

8.As to whether the Administration would consider making available loans under HSLS for sitting tenants in public rental housing (PRH) estates to buy their own PRH flats to optimize the number of beneficiaries, DS for H/2 stressed that sale of PRH flats was a separate scheme and the price of PRH flats would be set at a level which was affordable to tenants concerned.

9.A member asked if the repayment of previous loans could be made available for additional loans apart from the annual quota of 6,000. DS for H/2 agreed to consider the suggestion.

II.Any other business

10.The Chairman reminded members of the joint meeting with the Panel on Transport on Monday, 15 December 1997, at 2:30 pm and of the regular Panel meeting on the same date, immediately after the joint meeting.